1996 (6) TMI 28 - HC - Income Tax

Summary

Issues:
- Applicability of section 144B to the facts of the case
- Whether the assessment order was barred by limitation under section 153(1)(a)

Analysis:

Applicability of section 144B:
The case involves a charitable trust's assessment for the year 1979-80, where the Income-tax Officer proposed an assessment of Rs. 2,08,400, differing from the nil income reported by the assessee. The Income-tax Appellate Tribunal held that section 144B is applicable due to the substantial variation between the returned income and the proposed addition. Section 144B requires the Income-tax Officer to forward a draft assessment order to the assessee if a prejudicial variation exists. In this case, the Inspecting Assistant Commissioner approved bringing the entire contribution to tax, confirming the application of section 144B.

Limitation under section 153(1)(a):
The assessee argued that the assessment order was time-barred as it was passed on July 1, 1982, instead of by March 31, 1982. However, the court found that since section 144B was applicable, the extended period of limitation under clause (iv) of Explanation 1 to section 153(1) applied. This clause excludes a period not exceeding 180 days from the date of forwarding the draft order to the assessee. As the assessment order was passed within this extended period, it was deemed not barred by limitation under section 153(1)(a).

Conclusion:
The court answered the referred question in favor of the Revenue and against the assessee, confirming the applicability of section 144B and the non-barred status of the assessment order under section 153(1)(a). The judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.